In April 2022, the Libyan oil sector was subject to a blockade against a backdrop of political tensions. A year later, the situation has improved significantly. But the challenges ahead remain significant.
As a prelude to its report “The State of African Energy Q1 2023 Report” which will soon be published, the African Energy Chamber (AEC) delivered this Tuesday, May 16, an analysis of the situation of the Libyan oil industry after the blockage from April to July 2022.
According to the Chamber, the shortfall reached $34.7 million a day, just for the public oil company, for example. A figure that only takes into account the El Feel and El Sharara oil fields, two of the largest fields in the country.
However, since July 2022, the AEC points out, the situation of Libya’s oil industry has improved significantly. While the crude production plateau had collapsed by more than 50% to reach less than 600,000 b/d at the end of the first half of 2022, the latter posted 1.164 million b/d at the end of February 2023.
The African Energy Chamber notes that the replacement of the then head of the NOC, Mustafa Sanalla may have played a role in the improved oil production performance that followed thereafter.
This growth dynamic, which has continued until now, nevertheless remains very fragile. Its maintenance over the coming months will depend essentially on certain contingencies according to the AEC. The first concerns the improvement of the political context in Libya on which the stability of the local oil industry depends.
The seconds are, they, infrastructural. According to the Chamber, the authorities cannot hope to make the most of oil exploitation and reach the production plateau of 2 million bpd announced in August, without betting on infrastructure. In recent weeks, we have seen the State’s initiatives in this direction, in particular with the decommissioning of the Mellitah complex for rehabilitation work.
If such initiatives multiply, in addition to those intended to attract investors, Libya should be able to benefit from the oil revenue which represents 96% and 98% of the State’s income. Catherine Hunter, an analyst at S&P Global, believes that by creating a “much larger pool of investors”, Libya should be able to make progress in this direction.
